PDA

View Full Version : Texas Rangers, Ballpark in Arlington Sold


soxfanreggie
05-24-2010, 01:18 PM
http://www.foxnews.com/sports/2010/05/24/texas-rangers-declare-bankruptcy-set-sell-team/?test=latestnews

In a $575 million deal to help pay the lenders to Tom Hicks' group, the Rangers, the stadium, and land around the stadium will be sold.

illinibk
05-24-2010, 02:28 PM
And as part of the bankruptcy, A-Rod stands to lose about $25MM in deferred compensation. Even for someone who makes as much as him, ouch.

http://www.zerohedge.com/article/texas-rangers-file-bankruptcy-alex-rodriguez-lose-25mm-deferred-comp-largest-unsecured-credi

The Immigrant
05-24-2010, 06:51 PM
All unsecured creditors of the ballclub, including A-Rod, will recover every dollar they are owed.

illinibk
05-24-2010, 09:07 PM
All unsecured creditors of the ballclub, including A-Rod, will recover every dollar they are owed.

I admittedly haven't read the court release and am not familiar with the balance sheet of the Rangers. But, unsecured creditors are so low in the capital structure, they hardly ever receive 100% recovery in a BK. But baseball is a different beast, so I could see that happening.

PalehosePlanet
05-24-2010, 11:34 PM
How did Tom Hicks manage to go broke, anyone know?

A few years I seem to remember that he was one of the richest owners in the game.

The Immigrant
05-24-2010, 11:36 PM
I admittedly haven't read the court release and am not familiar with the balance sheet of the Rangers. But, unsecured creditors are so low in the capital structure, they hardly ever receive 100% recovery in a BK. But baseball is a different beast, so I could see that happening.

It has nothing to do with baseball and everything to do with the team's balance sheet. The operating entity (i.e., the ballclub) has very little secured debt ($75MM credit facility + $25MM owed to MLB). The sale proceeds will be used to repay the secured debt in full, then the unsecured creditors in full, and only then will the investors (the limited partners) see any recoveries. The creditors that will take losses are owed money by the limited partners. The bankruptcy case was filed only because the secured lenders refused to consent to an out-of-court sale process. Typically an out-of-court sale requires unanimous lender approval; in court all that is required is a majority vote.

A-Rod can sleep well knowing that his millions are safe.

The Immigrant
05-24-2010, 11:40 PM
How did Tom Hicks manage to go broke, anyone know?

He made his fortune in private equity, which is deader than fried chicken. Private equity deals were fueled by high leverage and cheap money. Simply put, there are very few such deals being done these days. Hicks is still a wealthy man but his outlook is markedly different now than it was in 2003. Not surprisingly, his investment in the Rangers was structured in such a way that he could walk away without putting much of his personal wealth at risk. He still owns the Dallas Stars, for example.

ewokpelts
05-25-2010, 11:21 AM
hicks also owns an english soccer team. so he's just going to be an idiotic owner elsewhere.

downstairs
05-25-2010, 03:48 PM
How did Tom Hicks manage to go broke, anyone know?

A few years I seem to remember that he was one of the richest owners in the game.

Corporate Bankrupcy doesn't really mean the owners are personally broke. The company merely has more debt than they have money. He still has all of his money.

seventyseven
05-25-2010, 04:26 PM
He made his fortune in private equity, which is deader than fried chicken. Private equity deals were fueled by high leverage and cheap money. Simply put, there are very few such deals being done these days. Hicks is still a wealthy man but his outlook is markedly different now than it was in 2003. Not surprisingly, his investment in the Rangers was structured in such a way that he could walk away without putting much of his personal wealth at risk. He still owns the Dallas Stars, for example.

I don't think it's accurate to say PE is dead. For the PE firms that have cash, there are lines out the door to get capital, no matter the terms of the deal.

The Immigrant
05-25-2010, 05:04 PM
I don't think it's accurate to say PE is dead. For the PE firms that have cash, there are lines out the door to get capital, no matter the terms of the deal.

Those are fair points, but very few firms have cash of their own to invest and, even then, the returns just aren't there without the leverage. Saying PE is dead is hyperbole of course, but it's a fact that the deal flow is a fraction of what it was a few years ago and may never return to the levels at which Hicks made his money. Most PE guys I know are focused on salvaging their existing investments.

illinibk
05-25-2010, 06:00 PM
Those are fair points, but very few firms have cash of their own to invest and, even then, the returns just aren't there without the leverage. Saying PE is dead is hyperbole of course, but it's a fact that the deal flow is a fraction of what it was a few years ago and may never return to the levels at which Hicks made his money. Most PE guys I know are focused on salvaging their existing investments.
I agree, PE deal flow is not where it was three or four years ago. However, deal flow is picking back up again, albeit at a measured pace (the small the mid-market activity seems to be picking up quickly though). But I read somewhere recently (in one of the industry rags: P/E Analyst, Buyouts, or the Daily Deal, not sure which one) that there is something like $600BB in available capital commitments for PE funds. Whether that number will grow is up for debate as pensions and endowments are backing away from additional PE commitments.